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Cash bidding for petroleum to boost budget

Cash bidding for offshore petroleum acreage will be introduced, with the revenue raised directly returned to the budget, federal Resources Minister Martin Ferguson says.

The cash bidding arrangements would apply to mature areas or those known to contain petroleum, Mr Ferguson said.

"This will prevent over-exploration in areas where none or little may be required and ensures the release of these areas is equitable, economic and efficient," Mr Ferguson told a business lunch on Wednesday.

"Revenue raised through the introduction of cash bidding for mature areas will be directly returned to the budget for the benefit of all Australians."

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Australia's petroleum basins have been lightly explored by global standards.

Successful bidders will hold the right to develop economic discoveries in the acreage by applying for a production licence.

They will be able to retain uneconomic discoveries through retention leases.

Mr Ferguson said the government would consult with industry on the development of the cash bidding arrangements to ensure confidence in the arrangements.

The move would encourage future investment in the domestic oil and gas industry, he said.

He also announced a funding boost to Geoscience Australia.

Mr Ferguson said $114 million had been committed to the agency over the forward estimates, including $34 million in 2013/14 and $40 million every year thereafter.

It included $26 million annually for pre-competitive data programs to better understand Australia's resource base and open up opportunities for new resource projects.

Mr Ferguson said the work was fundamental to ensuring that scientific and evidence-based decision-making underpinned resource development.

"This work will also contribute to the regular release of acreage for exploration, (on) which the Australian government continues to work cooperatively with the states and territories, by developing a five-year acreage release study," he said.

A further $5 million, increasing to $8 million in 2014-15, would be directed towards enhancing Geoscience Australia's groundwater modelling capabilities to better assess the long-term health of the Murray-Darling Basin and other regions.

An additional $3 million, increasing to $6 million in 2014-15, would be spent on Geoscience Australia's natural disaster planning and response program, the Australian Tsunami Warning System, and to further understand Australia's clean energy potential.